Posts Tagged ‘japan quake’

The worst damage occurred in Northeast Japan, but the impact has been felt across the country.

The television hit show Mad Men has cast a disparaging eye on the advertising industry and the talented people I’ve been proud to work in and with for almost five decades. But even as the media has kept us informed round the clock of the horror in Japan: the devastation of the 8.9 earthquake, the apocalyptic tsunami and the precarious and dangerous nuclear disaster in the making, it’s been impersonal reporting. Missing in the 24/7 coverage has been appropriate poignancy, personal comments and non-journalistic l observations.

I knew that a friend and really good guy and ad-man, Russell Wager (okay he’s a suit) had moved last summer from David and Goliath as managing partner and group client director on the Kia account (yea, Hamsters) to a really big job in Tokyo, Japan as the president of TBWA \ Hakuhodo part of the Omnicom Group. A really big and important job with a really big and important agency serving really big and important clients.

After the quake I’d sent Russ an email wishing him and Dawn, his wife, (also an ad person), well following the earthquake and tsunami. He responded saying they were okay – I should read Dawn’s daily blog — but that he had to walk 26 kilometers from the client’s office in Yokohama to his home in Tokyo on the day of the event. As a former agency suit myself, I admired and respected his great strength, courage and steel cajones.

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This led to another email asking if we could chat about his experiences and the impact on personal and professional life in Japan which we did in an amazing forty-five minute Skype call. As we talked his words and descriptions brought frightening, terrifying pictures and visuals from telecasts and newspapers to mind. What follows is my transcription of Russ’ thoughts and comments from the day of the quake till last Friday.

Storm clouds on the horizon? With a battery supplier down, could Toyota be facing a Prius shortage - and rising prices for buyers?

If you’ve got your eye on a new Japanese car, truck or crossover, you may need to stretch your budget a bit more than you anticipated. A number of online services that track automotive pricing report that Asian makers and their dealers are already beginning to curb incentives and even raise prices in the wake of the earthquake-fueled crisis that has all but shut down the Japanese auto industry.

While makers such as Toyota, Nissan and Honda say they have adequate supplies available for U.S. customers, the situation clearly depends on which product you’re looking for. With fuel prices at two-year highs, demand was already on the rise, prior to the quake, for hybrids and other high-mileage vehicles, such as the Toyota Prius and Honda Fit.

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And with most of the automotive assembly plants in Japan still closed, vehicle shortages are mounting. Things are a bit better here, where only Subaru has halted operations at its Indiana-based “transplant” assembly line due to parts shortages. But analysts worry that more transplants could soon feel the impact.

Honda buyers are among the most likely to wait out a product shortage, says CNW research.

How much do you really want that new sedan? Would you sit tight for that sports car? Will you wait several months for that big SUV?

Japan’s continuing crisis has already resulted in the loss of tens of thousands of new cars, trucks and crossovers, whether damaged by Friday’s massive earthquake, the subsequent tsunami, or simply through lost production, most Japanese automakers unsure when they’ll be able to get their assembly operations back up-and-running.

Even in the U.S., the natural disaster’s effects are being felt, Subaru halting production at its Indiana plant, while Toyota cuts all overtime. And, now, even some Detroit makers could feel the pinch if shortages of Japanese-made parts begin to develop. (Find out more…Click Here.)

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“The impact of this has yet to unfold,” Mark Reuss, president of General Motors’ North American operations cautioned today, stressing that the quake’s impact on the Japanese supplier network could be “bigger than anyone knows today.”

One test will come if consumers begin to experience product shortages at the dealer level. American buyers have traditionally preferred to buy whatever they can find on a dealer lot, rather than placing a custom order that might take weeks, even months, to come through.

The impact of the Japanese earthquake and tsunami has now reached the U.S., two automakers announcing plans to cut back on production due to potential shortages of imported components.

Other Japanese makers are still assessing the situation, as are Detroit’s Big Three, all of which import parts and components from Japan.

“We’re watching hour-by-hour, part-by-part,” said a senior industry executive asking not to be identified by name.

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Subaru of America says it is suspending indefinitely production at its assembly plant in Lafayette, Indiana. The factory produces the maker’s Outback, Tribeca and Legacy sedan models. There are 3,500 U.S. workers at the factory, which last year produced 150,000 vehicles.

The shutdown could disrupt Subaru’s steady growth in the American market. The maker last year posted an all-time sales record of 263,820 vehicles, a 16% increase.

Shortages of Japanese-made components, such as semiconductors and batteries, could bring trouble for U.S. makers, including Ford, which uses Japanese batteries in its Fusion Hybrid.

While the Japanese auto industry reels from the devastating one-two-three punch of earthquake, tsunami and multiple nuclear accidents, domestic carmakers are also growing increasingly anxious about the global reach of the catastrophe.

Officials from General Motors, Ford Motor Co. and Chrysler Group report they are monitoring the situation carefully – while also exploring the potential for alternate sourcing of components currently purchased from Japan.

The lack of a single key component could bring an assembly plant to a sudden halt, industry insiders fear.

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“One area of growing concern is the supply of automotive semiconductors,” noted analyst Rod Lache, of Deutsche Bank. “Auto Industry purchasing execs had already expressed concern about tight supply of Auto Semis even prior to the disaster.”

These are the central components of today’s digital automotive componentry, whether used in engine management systems, airbag controllers or an infotainment like Ford’s Sync. Japan, said Lache, produces about 22% of global auto semiconductors. But the production process is particularly sensitive, and “even millisecond (electric) outages or small tremblers can result in the scrapping of weeks of in-process production.”

Over 1,300 Infiniti vehicles were destroyed at one Japanese port. The G25 is shown here, though it's not clear which models were ruined.

Automotive stocks are being battered by twin crises at opposite ends of the world. Just how long things will continue to worsen – and how bad they will get – is almost impossible to predict, industry analysts are warning.

But investors aren’t the only ones who could soon feel the impact. The Libyan crisis has already taxed on what some call a “crisis tax” to what U.S. motorists are paying at the pump. The Japanese earthquake and tsunami will almost certainly have at least some impact on the availability of products from makers like Toyota, Nissan and Honda. And that could translate into not only waiting lines but higher prices, observers warn.

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It was not a good day for Wall Street, overall, the Dow Jones Industrial Average slipping below 12,000 points for the first time in nearly two months. But automotive stocks were particularly hard hit by concerns about oil prices, the Japanese disaster – and the threat of a weakened economy. General Motors, which last week saw shares dip below its $33 IPO price, slipped another 34 cents, to $31.59, at the closing bell.